International trade has grown at an astounding rate over the last few decades. Among the reasons for this growth are globalization, economic liberalization in developing countries, increased mergers and acquisitions, and regional trade agreements like the North American Free Trade Agreement (NAFTA) or the European Union (EU).
As a consequence of the growth in international trade, both businesses and governments around the world are seeking ways to take advantage of the opportunities in international trade. However, with multiple parties involved in each cross-border transaction, complicated tariffs and duties, extensive documentation requirements, and fast-changing legal regulations that shift with each new locality, international trade presents a host of both business chances and business-oriented technological challenges.
While companies are under intense competitive pressure to minimize costs and to reduce cycle times, product sourcing is going global and represents one of the driving forces behind international trade. The increased reliance on global sourcing introduces additional pressure to implement automated systems that provide efficiency for diverse import-export scenarios. In other words, to remain increasingly competitive, companies need to replace manual, time-consuming approaches with automated processes.
One field that permits a higher degree of automation is trade preference processing. Trade preferences are measures that grant preferential customs treatment for goods from certain countries and geographical areas. Trade preferences are of benefit to both the importing and exporting economies. As to imports, trade preferences lower import costs by taking advantage of reduced or zero import duties. As to exports, trade preferences increase the competitiveness because the customer has to pay lower-or no-customs duties.
When goods are exported in an exemplary scenario from a member state of NAFTA to the EU, the EU grants trade preferences in the form of reduced customs duties if the exporter can demonstrate that the goods originate from the NAFTA region. Vice versa, NAFTA grants reduced import duties for imports from the EU if the imported goods are recognized as originating from the EU. As a consequence of trade preferences, companies need to determine and certify the origin of their goods.
While the origin of “simple” goods such as raw materials is rather easy to establish, this is not the case for complex goods like cars or industrial equipment. Such complex goods consist of a large number of individual parts delivered from various vendors (or plants) and thus have different origins. In order to determine whether goods consisting of individual parts are eligible for trade preferences or not, one has to take a look at the origin of each individual part. Generally speaking, goods composed of parts that mainly originate from the EU will be eligible for trade preferences when importing them from the EU into the NAFTA region, whereas goods composed of parts that mainly originate from non-EU countries will not be eligible for such a preferential treatment.
To determine the origin of the individual parts constituting a complex good that is to be exported, the manufacturer of the complex good requests so-called vendor declarations from his vendors that deliver the individual parts. A vendor declaration is a certificate that basically confirms that one or more parts delivered by a particular vendor are originating from a particular region (or, in the alternative, that the parts do not originate from this region) such as the EU. By collecting, aggregating, and evaluating the aggregated vendor declarations received for the individual parts of a complex good, the manufacturer of the complex good can determine whether or not the complex good will be eligible for trade preferences.
For manufacturers of complex goods, the generation of vendor declaration requests is a cumbersome task that often still requires many manual interactions and therefore becomes error-prone. Furthermore, problems result from the fact that larger companies purchase hundreds of thousands of different materials from thousands of different vendors. In principle, a vendor declaration is required for each individual material so that the data to be processed in connection with the generation of vendor declaration requests is immense. The problems resulting from the necessity of mass data handling associated with the generation of vendor declaration request are still aggravated by the fact that in most companies, vendor declarations requests have to be generated at a particular point in time (often once a year when requested from the local customs authority).
There currently exists no satisfactory solution to the mass data handling problems that arise in connection with the generation of vendor declaration requests in larger companies. Existing software and hardware solutions suffer from time out errors, buffer overflows and similar problems.
Accordingly, there is a need for a technique for mass data handling in a preference processing context and, in particular, as far as the generation of vendor declaration requests is concerned.